Business Ethics: A Contradiction in Terms? Part I

Business Ethics:(n) the study and examination of moral and social responsibility in relation to business practices and decision-making in business

A business is an enterprise with a product-offering for the sole purpose of making a profit. True or false? Ask most business owners this question and the answer would in all likelihood be a resounding True. For what right-minded individual would slave night and day, working his fingers to the bone, foregoing an income for months on end, sacrificing family, health and sanity, all towards bringing a product or service-offering to the market, if not for the desire to ultimately see a profit? It all seems so simple at the time. Perhaps you’re a visionary with an idea. An idea that would prove to change history. Perhaps you’re a genius with the golden touch who can take any idea and make it work. Perhaps you’re an intellectual, the university graduate with dreams of changing the world. Perhaps you’re a hard-working slogger who gets things done through sheer tenacity and determination. Whoever you may be, you all share a common goal: to make a profit by selling a service or product. But at what cost is this profit made? Have you considered the line that you will and will not cross in achieving that profit? How well-defined is that line? Clear and precise? Or sufficiently blurry around the edges for you to conceivably waiver one way or the other? Whether you’re the business owner or the person actually doing the work, one thing is certain. In the course of doing business you will at some point come across an entirely different species of man (or woman) – if you haven’t already. This is a very intriguing species, worthy of a whole field of study in its own right. One of the most impressive features of this species also renders it highly hazardous to the unsuspecting business person: its ability to camouflage. It looks and sounds like your average business person, be it entrepreneur, investor, business owner or employee. And at first glance it acts like your average business person. But it most certainly is not your average business person. Society has coined numerous terms in reference to this species. Swindler. Conman. Cheat. Crook. Hustler. Fraudster. Grafter. Scammer. Felon. White-collar thief. Usually accompanied by a few choice expletives that are best omitted from this piece. For the purpose of this article we will refer to this species simply as “The Undesirables”. Sometimes The Undesirable makes itself known fairly rapidly. At other times it may take a little longer for it to show its true colours. It all depends on what its ultimate goal entails. Consider some of these examples.

• The Company needs to upgrade its IT infrastructure, so the IT Director puts the transaction out to tender. One of the hopefuls contacts the IT Director with a proposition: if she awards the tender to his company, he will ensure a sufficient amount of profit is built into the transaction to make the deal worthwhile to her personally. In this case The Undesirable appears clothed as an authentic respondee to valid and lawful tender. But to achieve its own ends The Undesirable unmasks itself, rapidly yet surreptitiously, to the IT Director. The outcome of this scenario hinges on the answer to one vital question: Is the IT Director, too, and unbeknownst to the Company, an Undesirable?
• The wealthy CEO of a multi-national Company receives authorisation to appoint extra security personnel at his own private estate. He personally appoints a recruitment company that works on a commission basis. In addition to a team of security guards to rival the National Defence Force, the recruiter also proceeds to appoint: a Chef, aka a nutritionist to monitor the CEO’s correct food in-take; Assistant Chef, aka the food taster to guard against the risk of food poisoning; Cleaner, aka someone to remove obstacles that may impede the CEO’s progression; Gym Instructor, aka someone to ensure the CEO’s bodily health; Personal Assistant, aka someone to relieve unnecessary burdens upon the CEO’s daily life; and Gardener, aka someone to guard against the CEO stumbling over natural vegetation. All at well above market-related remuneration, of course, for it takes an exceptional level of skill and experience to secure the health and well-being of a CEO. The Undesirable in this scenario is cloaked as the appointed recruiter. Meanwhile, the other Undesirable, the CEO, attempts to safeguard its true identity by declaring that “I didn’t ask for it” when confronted by outraged shareholders.
• A business owner with an exciting proposition approaches an investor for funding. The investor’s Financial Director offers to approve double the amount granted – provided the business owner pays half the grant into the Financial Director’s personal account against invoices for “consulting fees”. While the FD’s actions clearly reveal it to be an Undesirable, is the business owner so desperate for the funding that she is willing to sacrifice her own moral fibre by joining this perilous species of being?

The cold, hard fact of the matter is that Bribery, Corruption and similar Questionable Activities comprise a rot in society that invariably starts off as little more than a bruise. What makes matters more complicated is that sometimes passing judgment isn’t all that simple. Take, for example, a large jewellery chain that discovers its major supplier trades in blood diamonds. Or a well-known fashion store sourcing clothes from a Chinese company with a pharmaceutical arm that sells rhino horn. Or the profitable dealings with the foreign customer who cast the first rock at the stoning to death of his adulterous wife. The challenge facing the honest, upstanding organisations of our society that wish to retain an untarnished reputation is two-fold:

• How to guard against the Company becoming embroiled in activities it regards as unsavoury; and
• If that fails, what to do about it?

Stay tuned for the next instalment where we explore a few solutions.

To be continued…

(In the meantime, check out our template Business Ethics Policy. No company should be without one!)

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.